Last month’s budget (on 26 November) gave consumers little comfort as they chose to double-down on saving in favour of spending, according to RSM UK’s latest research.

RSM’s quarterly Consumer Outlook survey found that if given a £5,000 windfall this week, nearly 60% of consumers would choose to either save it (38%) or pay down existing debt (19%).

Only 8% would spend it on Christmas presents in the latest blow to the retail industry.

In fact, 57% of consumers plan to save more or continue saving at their normal rate over the next three months. This doesn’t bode well for the outlook for consumer spending with the household saving ratio currently still at one of its highest levels since the pandemic.

Jacqui Baker, head of consumer markets at audit, tax and consulting firm RSM UK, said: “In the near to medium term caution is king. The budget gave consumers little comfort over the outlook of the UK economy and appears to have exacerbated an already cautious consumer.

“Households are battening down the hatches on spending. Instead, any income that would have been considered disposable is being used to either save or lessen any existing liabilities. This is the latest blow to the retail and hospitality industries during their biggest trading period of the year.

The research also found, when asked if the recent budget will impact spending, over a third (37%) said they’ll spend less as a result of the announcements, with nearly half (46%) concerned about job security over the next six months.

The biggest areas in which consumers plan to cut back on include eating or drinking out (33%), takeaways (27%) and clothing (25%).

Baker added: “The Golden Quarter had already been lacklustre so far, as consumers deferred spending in the lead up to the budget due to constant speculation and uncertainty. Now we’re likely to see the final month of this crucial period for the sector impacted, along with a slow start to next year.

“Despite the lack of imminent tax rises, the budget offered no real boost to consumer confidence or the UK economy. And with various tax rises backloaded to the end of this decade, which will undoubtably eat into consumers’ incomes, the outlook for consumer spending continues to be far from rosy.”

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